Download ECON 1100 * Global Economics (Fall 2007)

ECON 1100 – Global Economics (Section 05)
Exam #2 – Fall 2012 (Version A)
Multiple Choice Questions ( 2 12 points each):
1.
A good is “Non-Excludable” if
A.
it is easy (or relatively costless) to prevent consumption by those who do
not pay for the good.
B.
it is difficult (or very costly) to prevent consumption by those who do not
pay for the good.
C.
consumption by one person does diminish the quantity/quality of
consumption by others.
D.
consumption by one person does not diminish the quantity/quality of
consumption by others.
2.
Between 1991 and 2006, “Government Expenditures as a percentage of GDP” in
France
A.
were less than 33% in every single year.
B.
were slightly above 50% in each year (taking on a mean value of 53.02%
over this entire time-period).
C.
increased drastically, from roughly 30% in 1991 to roughly 75% in 2006.
D.
None of the above answers are correct, since no accurate measure of
“Government Expenditure as a percentage of GDP” can be calculated for
any country which uses the “Euro” as its currency.
3.
A trade surplus occurs when
A.
exports exceed imports.
B.
government purchases exceed consumption expenditures.
C.
the inflation rate exceeds the unemployment rate.
D.
the Misery Index is negative in value.
4.
Consider a market in which the efficient level of trade is 6,000 units. There
would be a positive Deadweight-Loss from too much trade if _______ units were
traded.
A.
7,400
B.
5,150.
C.
0.
D.
More than one (perhaps all) of the above answers are correct.
5.
The unemployment rate in the United States in July 2012 was 8.3%. This was
A.
only the second month ever that the rate went below 9.0%.
B.
only the fourth month ever that the rate went above 8.0%.
C.
the 42nd consecutive month with a rate above 8.0%, the longest such
stretch of time since the Great Depression.
D.
None of the above answers are correct.
6.
Suppose that between 2010 and 2012 the Unemployment Rate increased while the
Inflation Rate decreased in Germany. It follows that the value of the Misery
Index in 2012 ______________ the value of the Misery Index in 2010.
A.
could be greater than or could be less than
B.
must be greater than
C.
must be less than
D.
must be exactly equal to
7.
___________________ provides a measure of the total value of all final
goods/services produced within an economy in a given period of time, with all
goods/services valued according to “current period prices,” whereas
___________________ provides a measure of the total value of all final
goods/services produced within an economy in a given period of time, with all
goods/services valued according to a “single set of common, constant prices.”
A.
Nominal GDP; Real GDP.
B.
Real GDP; Nominal GDP.
C.
Nominal GDP Per Capita; Real GDP Per Capita.
D.
GNP; GNR.
For questions 8 and 9 refer to the graph below, which illustrates Supply and Demand
for peaches in 2012.
price
Supply 2012
a
7.75
4.95
b
d
c
e
f
Demand 2012
g
0
quantity
0
2,750
6,700
9,625
8.
At the market equilibrium, Total Consumers’ Surplus would be equal to
A.
“area (a).”
B.
“areas (a)+(b)+(d).”
C.
“areas (c)+(e).”
D.
“areas (a)+(b)+(c)+(d)+(e).”
9.
If 8,200 units were traded, then Deadweight-Loss would be
A.
greater than “areas (f)+(g).”
B.
exactly equal to “areas (f)+(g).”
C.
exactly equal to “area (f).”
D.
positive, but less than “area (f).”
10.
_________________ refers to the natural and undirected emergence of order out
of chaos.
A.
The Stabilization Function of Government
B.
Capital Flight
C.
Spontaneous Order
D.
The Free Rider Problem
11.
Which of the following is not a component of GDP?
A.
Net Exports.
B.
The Inflation Rate.
C.
Investment.
D.
Government Purchases.
12.
According to the depiction provided by the expanded circular flow diagram,
government collects taxes from
A.
both domestic households and domestic firms (but not from any foreign
sources).
B.
only foreign households and foreign firms (but not from any domestic
sources)
C.
only domestic firms.
D.
only domestic households.
13.
Government Spending as a Percentage of GDP in the United States is projected to
A.
decrease to less than 35% by 2016.
B.
increase to over 50% by 2016.
C.
remain above 42% for the foreseeable future.
D.
None of the above answers are correct.
14.
Scott bought a used snowboard from Brad for $100. This trade gave Scott a
Consumer’s Surplus of $20 and generated a Social Surplus of $35. It follows that
Brad realized a Producer’s Surplus of ___________ from this trade.
A.
$15
B.
$55
C.
$80
D.
$135
15.
The vicious-cycle-of-poverty
A.
is apparently true, since every country that was poor a century ago is still
poor today.
B.
suggests that poverty is self-perpetuating, because poor nations are unable
to save and invest enough to accumulate the capital stock that would help
them grow.
C.
has no merit whatsoever, since all poor countries always have GDP
growth rates over 10%.
D.
explains why consumers realize zero Consumers’ Surplus when buying a
good from a profit maximizing monopolist.
16.
A good that is used in the production process that is not (itself) a final good or
service is _______________.
A.
a permanent good
B.
a club good
C.
a public good
D.
an intermediate good
17.
Which of the following countries realized an Annual Inflation Rate of 12,563% in
2008?
A.
Nigeria.
B.
Germany.
C.
Japan.
D.
Zimbabwe.
18.
In a “free market economy” profits
A.
are only earned by firms that sell low quality products.
B.
are never earned by firms that produce goods for export to foreign
countries.
C.
serve as a “signaling device,” directing resources to their most valued
uses.
D.
More than one (perhaps all) of the above answers is correct.
19.
Suppose that Portugal realizes a constant GDP growth rate of 4% per year. As a
result, Portugal’s GDP would double in
A.
approximately 72 years.
B.
exactly 25 years.
C.
approximately 18 years.
D.
approximately 4 years.
20.
During the past six decades, inflation rates in the U.S. (reported on an annual
basis) were
A.
relatively high from 1949 through 1968, then relatively low from 1969
through 1984, and finally relatively high from 1985 through 2011.
B.
relatively low from 1949 through 1967, then relatively high from 1968
through 1982, and finally relatively low from 1983 through 2011.
C.
relatively high from 1949 through 1975, but relatively low from 1976
through 2011.
D.
relatively low from 1949 through 1985, but relatively high from 1986
through 2011.
21.
In 2011, Real GDP Per Capita in the United States was roughly ___________ the
value of Real GDP Per Capita in the United States in 1912.
A.
1.9 times larger than
B.
7.1 times larger than
C.
23.1 times larger than
D.
403.9 times larger than
22.
___________________ refers to a general decrease in the level of overall prices.
A.
Hyperinflation
B.
The Free Rider Problem
C.
Inflation
D.
Deflation
For Questions 23 through 25, consider a monopolist facing Demand and with
Marginal Costs and Marginal Revenue as illustrated below.
$
14.80
a
10.90
b
c
7.20
Marginal Costs
of Production
d
e
f
4.50
Demand
0
quantity
0
8,400
Marginal Revenue
of Monopolist
13,200
16,800
23.
To maximize profit, this firm should charge a price of _____ and sell _____ units.
A.
$4.50; 8,400.
B.
$7.20; 13,200.
C.
$10.90; 8,400.
D.
$14.80; 16,800.
24.
The efficient level of output for this good is _____ units.
A.
13,200
B.
somewhere between 8,400 and 13,200
C.
8,400
D.
0
25.
When this monopolist sets the price and sells the quantity which maximizes her
profit,
A.
Deadweight-Loss is equal to “areas (e)+(f).”
B.
Consumers’ Surplus is equal to “areas (a)+(b)+(c)+(d)+(e).”
C.
more than the efficient level of trade takes place.
D.
More than one (perhaps all) of the above answers is correct.
26.
The “Catch-up effect” suggests that, all other factors fixed,
A.
in the short term, an economy should expect to face a trade-off between
unemployment and inflation.
B.
the only way for firms in high tech industries to catch-up to their
competitors is to invest large amounts of resources in research and
development.
C.
the global economy is “rigged against new entrants,” in that there is no
way for poor countries to catch-up with rich countries.
D.
growth rates of less developed countries typically exceed growth rates of
developed countries, implying that the gap in GDP between less
developed and developed countries will decrease over time.
27.
___________________ refers to technical change that results in a change in the
production process.
A.
Embodied technical change
B.
Disembodied technical change
C.
Industrial Policy
D.
The Free Rider Problem
28.
A grilled chicken taco from Del Taco is
A.
rival in consumption and excludable.
B.
rival in consumption and non-excludable.
C.
non-rival in consumption and excludable.
D.
non-rival in consumption and non-excludable.
29.
When observing “Average Annual Working Time” across different countries, it
was noted that the typical worker in the U.S. spends roughly 1,787 hours per year
working. In comparison to other countries, this is
A.
more hours than any other country in the World (since the country with
the second highest value is Brazil, with a figure of 1,744 hours per year).
B.
higher than the figure for Norway (1,426 hours), roughly equal to the
figure for Italy (1,774 hours), but lower than the figure for Turkey (1,877
hours).
C.
fewer hours than any other country in the World (since the country with
the second lowest value is Canada, with a figure of 1,799 hours per year).
D.
exactly equal to the World average, since there is no variability
whatsoever in “Average Annual Working Time” across different
countries.
30.
The ___________________ is an international agency whose primary goals are to
stabilize international exchange rates and to lend money to countries that have
problems financing their international transactions.
A.
The Sveriges Riksbank
B.
U.S. Federal Reserve
C.
International Monetary Fund (IMF)
D.
International Justice League of Super Acquaintances (IJLSA)
31.
Per Capita GDP in Hong Kong is $45,900, while Per Capita GDP in Russia is
only $15,900. These values directly imply that
A.
people in Hong Kong are roughly three times happier than people in
Russia.
B.
the market value of goods/services produced per person is roughly three
times larger in Hong Kong than in Russia.
C.
people in Hong Kong are more highly educated than people in Russia.
D.
More than one (perhaps all) of the above answers is correct.
For Questions 32 and 33, consider a society facing the tradeoffs between
“Consumption Goods” and “Capital Goods” which are illustrated by the Production
Possibilities Frontiers below. The curve labeled “1992 PPF” illustrates the PPF of this
society in 1992. In 1992 this society chose “Point A” on this curve. As a result, by
2012 the society faced the PPF labeled “2012 PPF – A.” If they had instead chosen
“Point C” in 1992, then they would have realized “2012 PPF – C” by 2012.
Capital
Goods
2012 PPF - C
2012 PPF - A
C
1992
PPF
B
A
Consumption
Goods
0
0
32.
The “outward shift” of the PPF (from “1992 PPF” to “2012 PPF – A”) which
occurred between 1992 and 2012 could be best described as
A.
economic growth.
B.
economic development.
C.
hyperinflation.
D.
an increase in demand.
33.
If this society had instead chosen “Point B” in 1992, then the relevant PPF in
2012 would likely lie somewhere ___________________ in the graph above.
A.
beyond the curve labeled “2012 PPF – C” (i.e., further from the origin)
B.
between the curves labeled “2012 PPF – A” and “2012 PPF – C”
C.
between the curves labeled “1992 PPF” and “2012 PPF – A”
D.
below the curve labeled “1992 PPF”
34.
Klaus is the chief economic advisor for the country of Ruritania. Ruritania
currently imports nearly all of its clothing. Klaus suggests imposing a 200% tariff
on imported clothing in order to discourage domestic consumers from buying
foreign made clothing. He argues that this is the most effective way to develop
the domestic clothing industry (thereby providing desperately needed jobs for the
workers of Ruritania). The policy that he is favoring can be described as
A.
the vicious-cycle-of-poverty.
B.
export promotion.
C.
import substitution.
D.
Spontaneous Order.
35.
“Yummycakes” is a producer of pre-packaged cupcakes (operating solely within
the southeastern United States). So far this year they purchased $260,000 worth
of flour and $120,000 worth of sugar to use as ingredients in their cupcakes.
They also purchased $20,000 worth of cardboard to make packaging for their
cupcakes. They were able to generate a total of $900,000 of revenue from selling
their cupcakes. The total value contributed to Gross Domestic Product from this
economic activity is:
A.
$400,000.
B.
$500,000.
C.
$900,000.
D.
$1,400,000.
36.
In most markets Total Social Surplus is equal to
A.
Per Unit Price multiplied by Quantity Sold.
B.
Total Consumers’ Surplus divided by Total Producers’ Surplus.
C.
Total Consumers’ Surplus minus Total Producers’ Surplus.
D.
Total Consumers’ Surplus plus Total Producers’ Surplus.
37.
Suppose that “Good Y” is a commodity for which: (i) consumption by one person
does not diminish the quantity of the good available for others to consume and (ii)
it is nearly impossible to prevent consumption by people who do not pay for the
good. As a result, if “Good Y” were simply sold in a market, we would expect
A.
less than the efficient amount of “Good Y” to be traded.
B.
exactly the efficient amount of “Good Y” to be traded.
C.
more than the efficient amount of “Good Y” to be traded.
D.
None of the above answers are necessarily correct (since we need to know
something about costs of production in order to be able to determine
whether the resulting level of trade will be more than, less than, or exactly
equal to the efficient level of trade).
38.
The value of the Misery Index in the U.S. in June 2012 was
A.
(–0.13), the first time ever that any country has realized a negative value.
B.
2.96, lower than every other value realized since January 1948.
C.
9.86, roughly equal to the mean value since January 1948 of 9.50.
D.
15.14, higher than every other value realized since January 1948.
39.
Maurice is a citizen of Canada, but lives, works, and attends school in the United
States. Last year he went on vacation to Spain during Spring Break. In order to
pay for his college tuition, he works part time at a car wash in Woodstock, GA.
Last year he provided car washing services valued at $9,750. The value of these
services would be included in the calculation of GDP for
A.
Canada (since he is a Canadian citizen).
B.
the United States (since that is where the production took place).
C.
Spain (since that is where he went to relax on vacation, which was a
necessary activity for him to be able to work hard in school and on the job
throughout the rest of the year).
D.
All of the above answers are correct (since he has an “economic tie” to
each of the three countries).
40.
Consider a country in which: Gross Domestic Product is Y=$289 million;
Investment Expenditures are I=$34 million; Government Purchases are G=$65
million; and Net Exports are NX=$20 million. It follows that Consumption
Expenditures are: C=
A.
$34,391 million.
B.
$408 million.
C.
$210 million.
D.
$170 million.
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